The Retired Investor: Food Prices Are Climbing Again

Eggs, fruit, vegetables, chocolate, cereal, and all kinds of protein — wherever you look — prices are rising faster at grocery stores than anyone may have imagined. The bad news is that consumers can expect this trend to continue.

 

Food prices jumped by 1.8 percent year-over-year at the close of 2024. That was the fastest increase in over a year, according to the Labor Department. In the last two months of the year, grocery prices climbed by 0.4 percent in November and 0.3 percent in December. Expectations are that January will see another rise.

 

Most voters will immediately point to corporate greed, grocery gauging, or as a last resort, the outgoing Biden administration as reasons for accelerating food prices. But before you join the blame game consider that there is a far more insidious and dangerous trend that some of us are denying, while others are simply ignoring. Climate change is the main engine behind these price increases, and it is only going to get worse.

 

The weather changes are hitting the production of food from all sides. Bird flu was practically non-existent two decades ago. Today, waves of the disease are becoming a yearly occurrence. Avian flu is decimating egg supplies and forcing wholesale prices to go higher and higher. Prices are up 37 percent from last year with as much as a 14 percent increase in December alone.

 

Historic droughts, floods, and disease have already caused a major decline in the world's supply of meat, pork, and chicken. The Agriculture Department expects even higher prices for these areas in 2025.

 

Soft commodities have also been subject to massive carnage because of climate change. In this area, we can also throw in insect damage along with floods, frost, fire, and dry weather. Everything from grains, cocoa, sugar, coffee, and more has seen prices double rather than quadruple as supplies have plummeted. This translates into climbing prices for cereal, candy, ice cream, milk, and hundreds of other products.

 

The World Economic Forum recently polled over 900 experts across academia, business, government, international organizations, and civil society to determine what experts viewed as the most severe global risks over the next two and 10 years. Extreme weather ranked No. 2 over the next two years right behind misinformation and disinformation. Over the next decade, climate change ranked No. 1.

 

"It's climate change, what can you do," said an increasing number of my acquaintances with a shrug of their shoulders and a shake of their head. Gone are the days when people were actively concerned unless, of course, they became victims of a weather event. It is no longer even a voting issue as it was back in 2020. Despite increased and recent natural disasters, climate initiatives ranked lower than other major ballot issues, according to Pew Research Center data. 

 

One would think the growing cost alone of weather damage would sway American attitudes. Just two recent disasters, for example, Hurricane Helene and the Los Angeles fires will cost the country upwards of $500 billion. That is more than four times the outlay for Social Security last year, 60 percent of the Department of Defense budget and 32 percent of all the Medicare/Medicaid outlays for 2024.

 

During the presidential election, Kamala Harris proposed price controls on groceries, while Donald Trump promised to provide relief on the inflation front. He specifically singled out reducing grocery prices but never offered a strategy for pulling that off. He has recently backpedaled on that promise acknowledging that it will be difficult to stem rising grocery prices but has not explained why.

 

The answer is simple. In today's Populist America, there is little room for more sacrifice from a generation that has been left out. Answering the growing threat of climate change would require an enormous redirection of resources. That time has not yet arrived, but it will.

 

I believe that over the next five years, weather disasters will accelerate at an increasing rate and food production will continue to decline. The result will be higher and higher prices and fewer and fewer choices at the grocery store. At some point, the costs of doing nothing will become so great that we will be forced to act. One thing is clear. Making America great again will become more and more difficult in the face of a Mother Nature which has run increasingly amuck.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.